When I inserted the graphic I added horizontal and vertical spacing, but the spacing doesn't show up on the page. It is in the editor, but missing on the page. I have also noticed that borders show up in the editor and vanish on the actual page.

Not sure what browser you're using but I see spacing around the picture. I'm using IE 6.0.2900 here. Couldn't tell you if it was 25 and 50 pixels though that I see in the code. Seems big enough though for it to be that size.